Detroit Pistons Owner Tom Gores, Ilitch Holdings, Inc. President and CEO Christopher Ilitch and Detroit Mayor Mike Duggan announced today agreements under which the Pistons will move to downtown Detroit and begin playing at the new Little Caesars Arena starting next season.
The move will include construction of a new state-of-the-art Pistons practice facility and corporate headquarters that will bring substantial new investment and economic activity to the city, and a comprehensive community benefits plan that will bring millions of dollars more into Detroit neighborhoods.
“This is a historic day for our franchise, and for the City of Detroit,” Mr. Gores said. “We’re moving to a beautiful new arena that will provide a state-of-the-art fan experience, and we’re investing in the future of Detroit.
“I’ve always believed that a sports franchise is a community asset with the power to unite and inspire people,” he added. “There’s a big responsibility that goes with that, but there’s also a big payoff. Not just for the city of Detroit, but for the whole region. Detroit is rising, reinventing itself. The Pistons are doing the same. We’re in this together, and we couldn’t be more excited about that.”
Christopher Ilitch described the announcement as a watershed moment for the city, region and state.
“Tom Gores and the Pistons will contribute tremendously toward the incredible, positive momentum underway in Detroit, making our city stronger, which benefits residents, businesses and visitors not only in the city, but also across our region and state,” he said. “This is a bold move that will have a positive effect throughout our entire community.”
Mayor Duggan praised the move as more evidence of the city’s continued turnaround.
“This is further proof of Detroit’s resurgence and we look forward to welcoming the Pistons in their new home,” Mr. Duggan said.
Mr. Gores described Chris Ilitch as a driving force behind the deal, praising not only his efforts to spearhead construction of the arena, which is scheduled to open in September 2017, but also his family’s long commitment to Detroit.
“I am so impressed by the vision of Chris Ilitch and his parents,” Mr. Gores said. “We admire everything Mike and Marian Ilitch have done in Detroit and the passion they have for the city. Their dedication has served as a catalyst for so much investment and we are proud to join them in this effort.”
Christopher Ilitch said that a shared commitment to community helped bring the two sides together.
“We have tremendous respect for Tom Gores’ passion and commitment toward building a championship team and a stronger community,” he said. “We are very excited to work with Tom and his team to advance the vision of our founders, Mike and Marian Ilitch, for the live, work and play sports and entertainment district that our fans and the people of our city, region and state deserve. “
With the Pistons and Red Wings playing under one roof just blocks from the Tigers’ Comerica Park, and Ford Field, home to the Lions, Detroit will be the only North American city to have each of the four major professional sports leagues housed within four blocks in its urban core.
The Pistons are currently playing their 29th and final season at The Palace of Auburn Hills and will honor that history throughout the season in a series of special event nights highlighting the players, championships and special moments that made The Palace one of the nation’s premier venues.
“The Palace has been an incredible home filled with great memories and has served the franchise well for nearly three decades,” Mr. Gores said. “The entire Pistons organization appreciates the dedication of everyone in Auburn Hills and Oakland County who helped make the Palace so successful.”
Mr. Gores said that Ethan Davidson, whose father William Davidson built The Palace and owned the team for 37 years, will help serve as a curator of Pistons history in the new arena.
“The Pistons have such a rich history and it’s important that our new home pays respect to that great tradition,” said Mr. Gores. “Ethan and his family contributed so much to that legacy and I’m grateful that he’s agreed to be part of this transition as we set the stage to create more great memories in the years ahead.”
The Pistons’ move is subject to approval by the NBA, and is expected to be presented to the league’s Board of Governors sometime after the first of the year. Between now and then, formal legal agreements will need to be finalized, including an arena sub-concession and various other agreements between PS&E, the Ilitch organization and the City of Detroit Downtown Development Authority (DDA).
In the meantime, the parties have entered into various Memoranda of Understanding (“MOUs”).
Under those MOUs, Palace Sports & Entertainment (“PS&E”) has agreed to bring the Pistons to the new Little Caesars Arena. The parties’ sports franchises will remain separate and each sports franchise will continue managing its own business operations. With respect to entertainment, Ilitch Holdings, Inc. and PS&E have agreed to establish a joint venture in connection with their entertainment venues: Little Caesars Arena, Comerica Park, Fox Theatre, City Theatre, The Palace of Auburn Hills, DTE Energy Music Theatre, Meadow Brook Amphitheatre and Freedom Hill Amphitheatre. The planned joint venture will help ensure that Southeastern Michigan continues to attract the most exciting acts in the world while simultaneously supporting local and emerging artists.
Separately, the DDA has agreed to contribute $34.5 million to cover the cost of modifying Little Caesars Arena to accommodate NBA basketball in the arena. Any cost overruns or additional expenses will not be covered by the DDA or taxpayers.
It is estimated that at least 50 percent of the DDA contribution will come from savings generated through a refinancing of the existing Tax Increment Revenue bonds issued by the State in 2014 to partially fund Little Caesars Arena. The remainder of the DDA contribution will be captured by extending the term of these bonds by an additional three years. No City of Detroit general funds will be used.
Following DDA approval of the agreement, the DDA board, Detroit City Council and Michigan Strategic Fund board will be asked to approve the amended tax increment plan to support the proposed refinancing.
Fiscal and Economic Impact
From an economic standpoint, the move by the Pistons will provide substantial benefits to the local economy, which is already getting a shot in the arm from The District Detroit, a $1.2 billion sports and entertainment development.
Relocating the Pistons and building a new practice facility and corporate offices will generate an additional $596.2 million in estimated total economic impact in Metro Detroit and create more than 2,100 jobs, according to a study by the University of Michigan Center for Sport and Policy commissioned by Palace Sports & Entertainment. That includes an estimated 1,722 construction and construction-related jobs, and 442 permanent positions.
The move also could benefit Auburn Hills, Oakland County and the State of Michigan if the Palace of Auburn Hills, where the Pistons currently play, is redeveloped, according to a separate study by the U of M Center. In that event, the study projects a net increase of $7.3 million per year in new property and personal income taxes and the creation of 1,950 construction and permanent jobs.
Mr. Gores said it is premature to discuss the future of the Palace, but expects there will be a lot of attractive options.
“That is a valuable piece of property and we think there is a lot of opportunity to do some exciting things up there that would be very good for Oakland County,” he said.
Community Benefits for City of Detroit
The agreement with the city also includes a 10-point community benefits plan that will create jobs and bring millions of dollars of investment into Detroit neighborhoods.
“I’ve always said that the Pistons are a community asset,” Mr. Gores said. “My responsibility as owner is to make sure we are not only successful on the court, but off it as well. These initiatives will help us do that.”
Under the plan, the Pistons organization agrees to:
1. Invest $2,500,000 over six years in the construction, renovation and refurbishment of more than 60 basketball courts in parks throughout the City of Detroit in partnership with the City of Detroit’s Recreation department.
2. Employment of at least 51% Detroit residents on the construction of the Practice Facility.
3. Awarding of at least 30% of the value of all construction contracts related to the Practice Facility to Detroit-based companies.
4. Use commercially reasonable efforts to maximize post-construction employment opportunities with PS&E for City Residents.
5. Support workforce development initiatives for City Residents by donating $100,000 to Detroit Employment Solutions Corporation.
6. Partner with the Mayor’s Office to provide mentorship opportunities for young City Residents.
7. Participate in the Grow Detroit’s Young Talent summer jobs program.
8. Host free youth basketball camps, clinics, and other events for City Residents to promote youth basketball and youth enrichment programs in the City.
9. Provide 20,000 free tickets per regular season to Detroit youth and residents to attend NBA basketball games, in support of and in connection with community educational programs and initiatives.
10. Appoint and maintain a liaison to meet, communicate, and engage regularly with the existing Little Caesars Arena Neighborhood Advisory Committee or, with respect to the practice facility, if necessary any other committee created by the City for purposes of engaging local residents, consistent with the City of Detroit’s community benefits ordinance.
Support for the neighborhood initiative and jobs program will build on the significant philanthropic investments Mr. Gores, Palace Sports & Entertainment and the Pistons Foundation have already made in Detroit through partnerships with organizations like GROW Detroit’s Young Talent, the Detroit Police Athletic League, the S.A.Y. Detroit Play Center at Lipke Park, City Year Detroit, Dave Bing’s BINGO Mentoring Program, the Jalen Rose Youth Leadership Academy and Forgotten Harvest.
Little Caesars Arena
Construction of Little Caesars Arena is on track for a September 2017 opening and the centralized location will make Pistons games more accessible to more fans in more parts of Southeast Michigan.
Exciting features of the new facility include:
The design will include a dramatic arena bowl incline with great sightlines that place fans closer to the action.
Increased pregame and postgame entertainment opportunities with expanded access to restaurants and gathering locations connected to The District Detroit – a new world-class sports and entertainment development revitalizing 50 blocks around the arena.
All-inclusive club spaces with enhanced luxury and amenities, parking and food and drink options.
State-of-the-art technology that includes WiFi capabilities with greater bandwidth, mobile ticketing, wayfinding, high-definition video, stunning acoustic sound and smart phone mobile applications that will take you from street to seat.
The “Via Concourse” – an indoor street-style shopping and dining experience surrounding the arena bowl that is highly activated on game nights and will be open to the community all year-round.
The “Piazza” – an outdoor urban plaza that will be regularly programmed with music and entertainment and serve as a signature new public gathering place in Detroit.
The District Detroit is one of the largest sports and entertainment developments in the country. Located in the heart of Detroit, this 50-block, mixed-use development led by the Ilitch organization unites six world-class theaters, five neighborhoods and three professional sports venues in one vibrant, walkable destination for people who want to live, work and play in an exciting urban environment. Home to the Detroit Tigers, Detroit Red Wings, Detroit Pistons and Detroit Lions – The District Detroit represents the greatest density of professional sports teams in one downtown core in the country. Learn more at http://www.DistrictDetroit.com